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AGDW-Federation of German Forest Owner

Associations

Forest Ownership in Germany

private forest48 %

communal forest19 %

state forest33 %

total forested area 11,4 mio ha32 % of total land

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Average Size of Private Ownership

2 Mio private owners

5,48 Mio hectres

av. size < 5 ha

Who are the private forest owners?

50%

11%7%

6%

8%

6%

13%

< 20 ha 50 %

urban owners, small scale farmers, private persons, clerus

20 -50 ha 11 %

mid sacale farmers, private persons, clerus

50 -100 ha 7 %

large farmers, noble families, private persons, clerus

100 -200 ha 6 %

noble families, private persons, entrepreneurs, trusts

200 -500 ha 8 %

noble families, private persons, entrepreneurs, trusts

500 -1000 ha 6 %

noble families, private persons, entrepreneurs, trusts

> 1000 ha 13 %

noble families, private persons, entrepreneurs, trustsSource: BWI 3 2012

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History of Forest Producer Organizations in Germany

1879 – 1917 first grass root forest owner associations„Vereinigung Mitteldeutscher Waldbesitzer“

1918 establishment of regional forest owner associationsreason: fear of expropriation by left wing government 1918„Bayerischer Waldbesitzerverband WBV 1918“

1919 foundation of umbrella organization„Reichsverband dt. Waldbesitzerverbände“

1934 dissolution of all free organizations or inclusion in Nazi organization „Reichsnährstand“

1945/48 dissolution of all Nazi organizations by Allies WW II1946/47 reestablishment of regional forest owner associations1948 foundation of umbrella organization „Arbeitsgemeinschaft

Deutscher Wald“ AGDW1990 establishment of new forest owner organizations in former

East Germany

Structure of Private Forest OwnersOrganisations in Germany

1,2 Mio members

450.000 organised

AGDW

13

federal state ssociations

WBV

4550

regional coorperations

FWV, FBG, WBV

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Structure and Working Fields of AGDW

PresidentPhilipp Freiherr zu Guttenberg

units(members of 13 German countries associations)

European andinternational

affairs

Forestrycooperations

Public Relation tax affairs

nationalenvironment

and legislation

5 Members of the board

Structure and Working Fields of Federal State Associations

President

working fields

huntingpublic relationwork

federal stateenvironment

and legislation

federal statesubsidy issues

Members of the board (example: Bavaria 5 members)

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Structure and Working Fields of Regional Coorporations

Chair

working fields

information andassistance in

subsidyopportunities

offeringforest managment,purchase of goods

technicaladvice and

organizationof maschinery use

coordinating andfacilitating

timber marketaccess

Members of the board (example: FBG Isar Lech 5 members)

Size: 52 members owning 25.000 ha up to 1200 members owning 2500 ha)

Potential of Increasing TimberProduction

federal inventory (Bundeswaldinventur III 2012)• annual growth 122 Mio m3 11,2 m2/a/ha• harvest volume 76 Mio m3 7,2 m2/a/ha (statistical)

fire wood consumption approx. 30 Mio m2/a

rising restraints in timber production:• governmental biodiversity strategy 5 %-10 % demand of hands-off forest• governmental subsidy policy• misperception of working forests by society• mobilizing timber of urban forest owners and of older generation with life estate

conclusion: high potential of mobilizing timber resources in micro andsmall forest holdings

important: to industries demand due to diversification of HWPto owners financial benefits

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Main current Challenges

Society:• misperception of benefits of working forest• romantic notion of nature torwards aethetics and recreation• demand of codetermination in silvicultural decisions

Forest owners:• alientation of urban forest owners from their possessions• missing identification by youth to their family forest• usus fructus (life estate) by older generations – bank saving mindset

Government:• subsidising of reforestation with deciduous species• biodiversity strategy 5 - 10 % hands-off demand

Industry:• rising demand for coniferus species

QUESTIONS ?

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Develpoment of Family Forest Owners

• 600 – 1500 p.Chr– noble families, clerus

• past secularisation 1700 - 1800:– noble families, small freeholing farmers (yeomanry), wealthy private persons,

trusts, clerus

• past 1918:

– noble families, farmers, private persons, clerus, trusts

• past 1989 (reunification of Germany):– noble families, farmers, private persons, clerus, trusts, middle class industrial

entrepreneurs

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FUNDING

32%

36%

32%

financial fundament

membership fees deutsche Rentenbank donations and sponsoring

WORKING FIELDS I • Public relations and press work

- TV spot, newspaper anouncements- Flyer: „You have a forest? You are lucky! Every forest has a face!“- Stickers and labels- donation of christmas tree for governmental buildings

• Forest and environmental policy work- cooperation and capacity building with partners- srcutinizing topical political issues and trends (in Germany and EU)- influencing forest and environmental legislation (fight ban of

pesticide usage)- promoting state subsidies, climate fund etc.- mitigating tax and fee burden- promote multifunctional forestry and bioeconomy

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WORKING FIELDS II

• International and european collaboration on forest relatedissues

• Member associations- information- capacity and network building- encouraging to promote public relation work inside regional

cooperations- organisation of national and regional events- annual national meeting of managers of large forests

holdings

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• Income tax

• Property tax

• Inheritage tax

• Soil and water tax

• Subsidy programms

• Social payments

Tax and financial incentive policies

How are revenues from sale of timber treated?

• regular income taxed by individual tax ratesexemption: salvage wood by natural hazard

1/4 or 1/2 of individual income taxtax free amount € 8.480 than from 1 % - 45 % (from 255.000 € up)

• VAT all income and expenditures taxed with different rates (5,5%, 7 %, 10,7%)

VAT mandatory 5,5 % (flat rate) received on timber revenue andtreated as real income but expenditures taxed with 19 %

optional 19 % (regular rate) received on timber revenue must beoffset with 19 % VAT on expenditures- surplus of the calculation has to be paid to the tax revenue office- deficit will be reimburesd by the tax revenue office

Income Tax

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How are forest management expenses treated?

Taxation system distinct between

• over 50 ha or under 50 ha but bookkeepingdeductable in full invoiced amount

• under 50 ha and not bookkeeping55 % of revenue value gained by timber sale deductable as overallexpences regadless the real costs

Conclusion: very favourable for holdings less than 50 ha

Income Tax

Are there other aspects of income tax policy that encourage ordiscourage timber production?

Encouragement

• VAT flat rate – when the expenses are kept lowexample: natural regerneration, sale from stock

• Flat rate of expenditures< 50 ha regulation

• Lower tax rates in case of salvage wood 1/4 or 1/2

Discourragement

• taxation at all – no real discouragement

Income Tax

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Overall, is the policy in your country favourable or not?How might it be improved?

It is favourable

but

current mindset of politicians in terms of taxation strive for cancelling special tax benefits

lack of understanding of sepcial producer situationslack of understanding of social benefits provided for feejealousiness torwards landowner in terms of intangle value (asset class)

Income Tax

How do they affect timber production?Is there potential for improvement?

rate of property tax refers to• the productivity of the land

special calculation key (Einheitswert)• the regional multiplicator released by the community

in compare with the US relatively low. approx. 3-5 €/ha

No direct affect to timber production.

Property Tax

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Inheritage/gifting Tax

Steuerwert bis einschl.

Steuerklasse Iparents/cildren/partner

Steuerklasse IIsibling,/nephew/nice

Steuerklasse IIIAll others

75.000 Euro 7 % 15 % 30 %

300.000 Euro 11 % 20 % 30 %

600.000 Euro 15 % 25 % 30 %

6.000.000 Euro 19 % 30 % 30 %

13.000.000 Euro 23 % 35 % 50 %

26.000.000 Euro 27 % 40 % 50 %

über 26.000.000 Euro

30 % 43 % 50 %

regular deductable allowences

• partner € 500.000• siblings € 400.000• parents € 100.000• others € 20.000

taxtion benefits by inherting and gifting

• fixed valuation rate refering to species regardles productivity

• no taxtion when enterprise continues to run more than 7 years• 15 % taxation when enterprise continues to run more than 5 years

Inheritage/gifting Tax

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• tax based on property• some federal states• financing high water production costs

Paradoxon: areas with less precipitation and weak soil productivityless timber revenue

perverding taxation: 10 €/ha > annual revenue/ha

current situation: several law suits pending

Soil and water tax

no national programm – every federal state has its own programm

Bayaria:individual reforestation according specific requirements

- decidious trees + fir/douglas (climate)- suitable for specific soil conditions

precommercial thinning

road constructions on project basis for forests hold by small scaleownership

Producer organization:co financing employment salaryco financing machinerytimber mobilizating premium payment

Subsidy Programm

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• mandatory payment by landowner to state insurance officefor health,for retirement coverage,for accident

based on the amount of land

• room for improvement: better financial social servicelow financial coverage, private co payment required

• double/tripple mandaroty payment for the same landby owner,by hunter, indirectly by acting vendure

Social payment